iRamble about iStuff (Arduino/CoCo stuff now at www.subethasoftware.com)

Category Archives: Cell Phone Industry

I bought my first cell phone in 1994. It was a bag phone I kept in my car. It was just magical to be able to make a short (but expensive) phone call without being home or at a pay phone. Since then I have had a variety of phones, including one of the first “smart phones” (before we had such a name) – a Kyocera 6500 (a Palm Pilot with a phone built in). It was just magical to be able to download e-mail or pull up a website without being at home or work on a computer.

I went through three PalmOS-based phones (the Kyocera 6500, a color Samsung SPH-i500 and a Treo 650) before the iPhone came out in 2007 and made those devices look absolutely primitive.

The iPhone was the first device I ever signed a contract for. Back then, pushy cell phone sales folk would push 2-year contracts because it made them money commission money. The dirty little secret was that the carriers did not require 2-years and all had 1-year contracts available (and in some cases, no contract plans too). This was at least still the case around 2002 or so when I spent a year selling phones for T-Mobile (recently rebranded from VoiceStream), Sprint, Nextel and others. At some point, things change.

I had never had to sign a contract to activate any of my phones until the iPhone in 2007 — and that was WITHOUT getting any kind of reduced price like we are used to today. Initially, you bought the iPhone at full price from an Apple Store then took it home to activate via iTunes. There was no negotiating. You either signed up for 2-years with AT&T, or couldn’t use the iPhone. Yep, we paid FULL PRICE for the phone PLUS signed a contract. AT&T had to change quite a bit to work with Apple (visual voice mail support, no AT&T branding on the device, activation done through Apple). At least there was unlimited data!

Today, there is a new generation of cell phone owners that just assumes you get the phone free (or $99, or $199, or…) and sign a two year contract. Most phone owners only care about having a phone that works when they need it (coverage) and has enough data for what they do, and enough text or voice time for how much they type of talk. Sadly, most are getting ripped off since today you can go to a no-contract carrier, pay full price for a device and still end up saving hundreds of dollars over the course of two years. And, be able to sell your device and get a new model at any time you want. And no cancellation fees if you device they suck and want to switch to a new carrier.

With that said, I haven’t had a cell phone since 2009. I have my original iPhone, and after its two year contract was up, I got the iPhone 3GS with another two year contract. In 2011, once my contract was done, I shut off service because I decided paying rent and having food was more important than being able to check e-mail in my pocket.

Adjusting to life without a smartphone, especially after having one for so long, was hard at first. I did have an iPad with unlimited AT&T data plan (no contract) so I wasn’t completely shut off, but I wasn’t bringing the iPad with me when I went on a bike ride. Instead, I’d use my old iPhone 3GS as a biking computer (using b.iCycle, which can preload maps) and I would stop at WiFi points (like outside a Burger King) if I wanted to check messages.

I always ran the risk of getting lost and being on a trail somewhere with no map and not being able to figure out where I was on the always-out-of-date paper trail maps I had with me. It sure would be nice to have data service during a ride, but certainly not worth having a 2-year contract and $65/month bill.

I considered activating a cheap Android on Virgin Mobile or Boost or some similar no contract carrier. They had plans with “unlimited text and data” (basically) for $35 a month (some discounting $5 if you linked it to your bank account to pay each month). However, my frustrations with a cheap Samsung Galaxy Rush phone I picked up for $20 from Best Buy made me realize a crappy phone with data wouldn’t be that great.

Was there a way I could bring data to my old iPhone 3GS? It was GSM, so only carriers like AT&T or T-Mobile would support it. AT&T was too expensive, and T-Mobile didn’t look much better until I noticed this on the bottom of their prepaid plans page:

A no-contract $30 “unlimited data” plan?

Assuming T-Mobile has service where you are, $35 seems like a great price for someone who talks and texts a ton. For data, the $30 plan (with only 100 minutes of talk time) would be great.

I tried to contact T-Mobile to find out how to buy this (there was no clickable link) since it did say “devices activated on T-Mobile.com.” (I was not going to buy a phone from Wal-Mart.) A phone call ended up in a transfer and being on hold, so I quickly gave up and looked for another approach.

I ended up using Twitter to reach out to their support team. Very quickly I had a response asking me to register an account so they could direct message me. A series of short exchanges followed over the next day or so as I asked questions about this plan and how to get it, and whether or not I could just get a T-Mobile SIM and stick it in my 5+ year old iPhone 3GS and use it. I was aware that early on iPhone owners were able to unlock their phones and use them on T-Mobile, but at reduced speeds since the frequencies between AT&T and T-Mobile were different. They only shared the low-speed 2G (AT&T EDGE network) frequencies. T-Mobile support didn’t seem completely to understand what I was getting at, but on their assurance this could be done, I planned to give it a try.

Unfortunately, there didn’t seem to be any way to by this plan online. They sent me to a Wal-Mart to pick up a $30 kit:

At the time, it was on sale for $29.82 so I did an online Walmart.com purchase so I could just walk in to Wal-Mart later and pick it up (and earn me some Swagbucks referral points as well, making it even cheaper).

That evening I was able to remove my old AT&T SIM (where’s a paperclip when you need one) and then fit the new mini SIM in a plastic adapter and put it in my 2009 iPhone. After a short registration online, I had a working iPhone 3GS with slow EDGE data. I would now have a phone for emergencies, and data to get maps while on a bike ride.

Although an overpaid computer engineer by trade, I’ve had bad times where I had to keep my landlord happy by selling wireless serivces. SprintPCS, T-Mobile, AT&T Wireless, US Cellular, NexTel, DirecTV and Dish Network were all part of the “sell this and make commission” plan. But, my experience lead me to great distaste for the industries. To this date, I refuse to purchase any similar service from anyone other than an official company store. Read the fine print. There may be a $150 cancellation fee from Verizon, but Universal Wireless Cell Company tags on their own similar fee to double get you. Buying “direct” prevents that and, as the iPhone has shown, there’s always the possibility for something just over the horizon that will make you glad you can get out of your contract (easier).

I could write a book on all the issues and problems (and how to avoid/prevent many of them) when dealing with cell phone companies. I could share stories from within the company I worked for that would make you fear ever filling out an application (with your social security number and such) again. But the real education I got turns out to be very significant in lieu of the iPhone release later this year.

Contracts, you see, are the key to making money in the cell phone business. My store didn’t even sell phones. You couldn’t buy one. Period. What we sold was contracts. My cut of activating one carrier was $45 for a one year agreement. $50 for turning on a one year satellite contract. You get the idea, and can imagine the money being made by the company itself, and the cell phone company (though they take the risk that the customer will keep paying those monthly bills; and if they don’t, there’s always those cancellation fees.)

More and more companies push for two year agreements. So did we, even though we were still able to activate one years; we were told not to offer them, period. That’s good for us (more commission) and good for the cell co (you can’t take your business elsewhere without them still getting money) but … bad for anyone trying to sell a phone to the majority of people walking through the strip mall.

“Sorry, I’m under contract” was what changed my job from a potential “$50,000 year” commission rate to a lousy $6.50/hour retail gig. And when working for a specific GSM company, with poor coverage in many areas of my state, they simply weren’t even an option for those who could have signed up (unless we lied about how great it would work on their farm; lying is also very important to successful cell phone selling, it seems).

So the iPhone comes out, and only folks like me who have been out of contract for years can even think of buying one without spending a few hundred more on cancellation fees. And even if you do that, or can get out of your contract using “other techniques,” will Cingular even work in your area?

Folks like me, smart enough to avoid contracts and perfect early adopters for anything high-tech with Apple on it simply can’t have an iPhone. There’s still question to whether or not I’m going to be able to buy them in my state, and even if I can, will I be able to use them anywhere outside the main city limits?

The iPhone will be an amazing device. It should easily be able to outsell the Treos and similar “smart” phones, but probably not touch the Blackberry corporate environment (who refuses to switch to Unix-compatible Macs while slowly embracing nonstandard standards of Linux). But none of this matters.

The iPhone may be a roaring success when compared to the Treo (and I’d toss my 650 in a minute if I could), but compared to the Apple iPod… it will be seen as an iPhailure. Apples to Apples, that’s what will make the iPhone seem like a failure.

Even if it manages to destroy many other competing smartphones easily…

Now, if only Cingular can find out if I can buy one in my area. I’m out of contract, and we finally got Cingular service here about two years ago.